Saturday, March 04, 2006
The Mobile Press Register
THE LEGISLATURE'S newest member has the best idea about the competing tax reform plans on the table in Montgomery.
At his swearing-in ceremony this week, Rep. Barry Mask, R-Wetumpka, called for a compromise between offerings by Gov. Bob Riley and Rep. John Knight, D-Montgomery. "There's no reason we can't pull out the best of both bills and give the poor a tax break right now," declared Rep. Mask, who won a special election on Tuesday during which he campaigned for tax reform.
And indeed, a compromise makes a lot of sense.
There are five tax reform bills floating in the Legislature, but Gov. Riley's and Rep. Knight's have the highest profiles. All the plans are trying to find a way to ease the tax burden on Alabama's poorest citizens, which sorely needs to be done.
It's embarrassing that Alabama requires a family of four to start paying income tax when their income reaches $4,600, the nation's lowest threshold. Moreover, Alabama levies more tax ($538) than any other state on a family whose annual income is at the federal poverty line of $19,400.
A national study recently concluded that Alabama stands "alone in taxing the extremely poor." This is shameful, even for Alabama, many of whose residents takes pride in standing alone on tax issues. Truly, Alabama legislators have a moral responsibility to ease the state's burden on the poor, who contribute their share through sales taxes and, for some, property taxes.
The sticking points on tax reform understandably center on who gets tax cuts and who gets tax hikes, if anyone.
Gov. Riley's plan would raise the income-tax threshold to $15,000 over five years, by increasing the standard deduction and personal and dependent exemptions, a move that would give every taxpayer a break.
Rep. Knight's plan would raise the threshold to $22,800 next year, also by raising deductions and exemptions. But he's also proposing to pay for the tax cut by eliminating the federal tax deduction on state income tax returns, leading to a tax increase for citizens who make more than $100,000 a year.
Problem is, some legislators won't accept any tax hikes, including removal of the federal income tax deduction; and others won't accept a tax break across the board. Additional issues include whether to adopt a plan that would require voters' approval.
Rep. Knight's plan, for example, would involve amending the constitution, so a statewide vote would be needed. Gov. Riley's plan, in contrast, could be implemented without an election.
On this issue, Gov. Riley's right, it's best not to have an election. Voters aren't likely in the mood to approve anything that would result in higher taxes. They demonstrated as much in 2003, when Gov. Riley offered a tax reform plan that went down to ignominious defeat.
Legislators would be wise to fully debate all the alternatives, but one goal should prevail: Reducing the tax burden on Alabama's poorest citizens.
To get this done, Rep. Knight and other legislators might have to accept a tax cut for all and leave the federal income tax deduction for a later fight.
Alabama has many needs for which the state's wealthiest citizens should pay their fair share, including prison overcrowding, public education, health care for the poor and aged, shortages of state troopers and prison guards, crumbling rural bridges and shabby environmental protection. But helping the poor is more important for now.
Gov. Riley, too, may have to give. His plan doesn't set the threshold high enough. It should be somewhere between his suggested $15,000 and Rep. Knight's recommended $22,800. Additionally, Gov. Riley should accept speedier relief. There's no need for Alabama's poor to wait five years for the full tax relief.
However the details are resolved, legislators can do right in the end by following Rep. Mask's advice: Compromise by taking the best features from the competing plans, and give Alabama's poorest a tax break next year.
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